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SAAB CASH CRISIS
Board raised pay while Saab stood still: report

Board raised pay while Saab stood still: report

Published: 18 Aug 2011 06:57 GMT+02:00
Updated: 18 Aug 2011 06:57 GMT+02:00

“It feels like everyone is out to grab what they can get,” said a Saab employee to TV4 News on Wednesday.

The company has motivated the raise with the explanation that the difficult times since acquiring Saab have generated a heavier workload and that renumerations hadn’t been raised since 2004.

New chairman of the board, Hans Hugenholtz, received a raise of 633 percent, from 147,150 kronor to 611,163 kronor. Others also had their pay increased significantly.

The increase in pay was also paid out retroactively for 2010.

The discovery has raised questions among many as to how ethical it is for the board to raise their salaries when the company is doing badly.

“When you see a company which is obviously limping it is a bit rich for the board of directors to give themselves a raise even if difficult times means a heavier workload,” said Gunther Mårder, CEO of the Swedish Shareholders' Association to TV4 News.

And on Wednesday Swedish authorities also launched an official debt collection probe of beleaguered carmaker Saab, whose bills have been piling up for months, in a step that could end in bankruptcy.

The probe launched Wednesday by the Swedish Enforcement Administration (Kronofogden), only concerns 369,000 kronor ($58,000) in unpaid bills to two suppliers but the agency said it would likely be expanded within the next few days to include claims from 14 other suppliers unless Saab can pay in time.

Kronofogden's Hans Ryberg told AFP the two first suppliers to see their

claims result in an official debt collection probe were Sweden's Infotiv, owed 224,000 kronor, and Norway's Kongsberg, owed 145,000 kronor.

In all, the 16 suppliers have reported that Saab owes them 42 million

kronor but others are likely to soon follow suit and the final sum could swell by dozens of millions of kronor, the agency said.

With its probe, Kronofogden aims to determine if Saab has enough cash or assets to meet its obligations.

"It is not impossible that it has the money since (parent company) Swedish Automobile has conducted a new share offering," Ryberg said.

"If we see that Saab does not have the means to pay its suppliers, they could ask a court that the company be declared bankrupt," he added.

He said it usually took Kronofogden between one and three months after the beginning of its probe to file its report.

Swedish Automobile has for months been seen as scrambling to raise cash to pay suppliers and relaunch production and the carmaker's plant in Trollhättan in southwestern Sweden.

The company has among other things entered a deal to sell and lease back its real estate, and signed deals with Chinese distributors.

On Monday the company announced its third new stock issue, aiming to raise more than 35 million kronor in fresh cash.

"We do not want to push Saab into bankruptcy," Kongsberg spokesman Hans Jørgen Mørland said Tuesday, explaining though that his company wanted to be "formally present" among the suppliers making their claims heard.

Mikael Wickelgren, an economic researcher at the University of Skövde in central Sweden, said Wednesday's news did not change much.

"In practice, nothing has changed. We have known for a long time that Saab is having trouble paying," he told the TT news agency.

"But the symbolic value of the probe is strong," he added.

TT/AFP/The Local (news@thelocal.se)

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Your comments about this article

07:41 August 18, 2011 by Luke R D
Surely this news is not a surprise. When have boards truly cared about the people that actually keep the company moving forward? Have we not learnt anything from banks and their directors' pay rises during financial crises?
08:23 August 18, 2011 by RobinHood
It will become clear later that Saab has been asset stripped over the past few months: payments into pensions funds, valuable property sold at bargain prices to unknown, off-shore buyers , etc. The press, and politicians will express their suprise and outrage, but don't believe them. They are all familiar with the Rover story. and are all aware Saabs new owners have followed the Rover playbook step by step.

The unspoken deal between politicians and the Saab's owners is "Give Saab a few more months, and you can take what you want". The press goes along with it for fear of being accused of tipping Saab off the edge.
09:16 August 18, 2011 by The Grand Master
'New chairman of the board, Hans Hugenholtz, received a raise of 633 percent, from 147,150 kronor to 611,163 kronor.'

Pardon my early morning zombie brain activity but is this per month or per year?

Per month and this is the most outrageous abuse of his position imaginable, surely nobody could have the bare faced cheek to do that given the position (imminent demise) of the company. (611,163 per month....no no...no no no...etc)

Per year and at 147,150 Sek the guy would have been better off getting a cleaning job in McDonalds.

Sadly however, it does seem that the end is nigh for Saab.
09:52 August 18, 2011 by StockholmSam
Further proof that businesses need more, not less, government regulation. If they could show a historical pattern of acting ethically when nobody is looking, then they could be trusted to function free of regulations. But sadly that rarely happens. If prudent oversight is not instituted and abusers such as these Swedish Automobile goons are allowed to go unpunished, the working class is doomed.
10:43 August 18, 2011 by Mib
It seems these guys and gals and rewarded regardless of success or failure. They always hav an excuse as to why they need to raise their salaries and when they do...it's not your measely 1 to 2%...it's 633%!! Whatever your poitical incline is, this is totally wrong. It flies in the face of justice and treating your fellow work colleagues as if they were just animals.

Now...if the board manages to pull Saab through to produce cars and protect the long term future of their employees, then there shouldbe some incentive for that. But when as it appears the company is in dire straits, everyone pulls together and focuses on the company's survival. I would expect this kind of thing for a company in the US or UK, but in Sweden?

If the politicians have any bakbone, they will shout from the hillltops at how wrong this is and if necessary, bring in regulations that ensure fairness and common sense when companies are battling to survive. These board members are morally bankrupt and will move onto another pay day somewhere else, once Saab has disappeared with the employees paying the price. If it's right for the board to have a pay rise based on their judegement, then the employees should get a raise. I'm not into violence, but it seems that would be the only type of argumentt hat would emphasise the anger and injustice of the situation. What planet are they on?
12:10 August 18, 2011 by RobinHood
You really are clueless Stockholm Sam.
13:05 August 18, 2011 by StockholmSam
@RobinHood

Am I really clueless, RobinHood? Do you think robbing from the poor and giving to the rich is the best policy? Perhaps you need to change your alias to "Sheriff of Nottingham."
13:10 August 18, 2011 by Eagle63
By acquiring Saab, Spyker became almost 100 times bigger. With that follows responsibilities of the board members.

To be able to keep competent people on the board a company needs to pay them a certain amount when the company is at a certain size, this is very well known in the cases of Ericsson and Vattenfall in Sweden where even the swedish government has allowed compensations that were through the roof in the eyes of most people in order to be able to keep people and competence within the company. So now news there…

The compensations were raised retro-actively because of Spyker acquiring Saab on Feb 23, 2010 so the board had not been payed with the "right" amount when the job was actually done.

The board fees are paid by Spyker NV (Swedish Automobile NV) and NOT by SAAB…

The fact is that the compensation for the board members is low as compared to similar sized Dutch listed companies.
13:14 August 18, 2011 by Twiceshy
@The Grand Master:

It's also important to ask whether "chairman of the board" is a full-time or a part-time job... I'm guessing it's part-time, because it's common for people to be in the board of several companies simultaneously.
13:25 August 18, 2011 by Luke R D
Stockholm Sam, I think Robin Hood is referring to you assuming this was done without knowledge of at least some politicians as a little naive (absolutely no offense intended, Sam, I assure you). The reality is probably much closer to what Robin Hood was talking about than many people would care to believe. The politicians are really no longer governing anything but how money is moved from one location to another (often to organisations/accounts they have some sort of stake in) under the noses of everyone else, and they're laughing, laughing at the whole thing.
13:45 August 18, 2011 by jack sprat
Vultures gorging themselves on the last remaining strips of flesh on the carcase.

It's all very sad.
13:57 August 18, 2011 by PTH
This is a good example of bad journalism. The salaries involved are not paid by Saab but by Spyker, so it is not Saab money.
14:32 August 18, 2011 by jomamas
Stockholm Sam - 'business need more government regulation' , really?

You realize that it is none of your business?

You realize that the board members can get paid whatever the business deems necessary - so long as the shareholders (i.e. owners) approve?

You want some government idiot to go in there and set wages? Fix prices? Have you been to the Ukraine? Is that what you want?

If you owned a Pizza restaurant that was closing down, and you wanted to pay yourself out of the remaining funds - which is your money after all since you own the restaurant - do you want Magnus from down at the office coming in to tell you what you are allowed and not allowed to spend of your own money?

You can regulate things like minimum wage, working conditions, safety, health concerns - but you should not regulate companies core businesses.
17:20 August 18, 2011 by spy
I am not bothered by the money as it is not a great deal and is probably in line with many other companies of this size. However the timing of this decision stinks to high hell especially as they had no proven results.
00:28 August 19, 2011 by Twiceshy
@jomamas

Is it "your own money" if it's on the company account, and the company has enormous debts? There are rules about these things I suppose.
03:46 August 19, 2011 by Visew
Is the raise meant for their doing a "good job" for the company, whether it is Saab or Skyper? Of course, Saab did not make any profit, bit I doubt that Skyper has made any out of the deal! So if they did not do anything good for the company should the get any pay at all? And then will the Swedish government bail out Saab just like what the US did with their banks or GM or Chevrolet???
16:00 August 19, 2011 by Nemesis
Neo-Liberalism at its greatest, rewarding failure and penalising sucess as usual.
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